10 Secrets Auto Insurance Companies Don’t Want You to Know

Consider these factors to save money when buying or adjusting your car insurance.

businesswoman looking ahead while driving car
Updated May 28, 2024
Fact checked

We receive compensation from the products and services mentioned in this story, but the opinions are the author's own. Compensation may impact where offers appear. We have not included all available products or offers. Learn more about how we make money and our editorial policies.

Car insurance covers accidents, damage, injuries, and other issues that may arise from operating a car. Pricing can be complicated, and one size does not fit all. Rates may vary depending on a variety of factors that insurance companies use to calculate your specific coverage. Some added expenses may be necessary, but there might be ways to lower auto insurance costs that aren’t so obvious.

Here are some tips to consider that may help you save money on your car insurance

Your car’s extras could affect rates

Prostock-studio/Adobe serious auto salesman sitting near new car

An insurance provider will need to know the make and model of your car, and if your vehicle has high-end extras, which could translate to higher insurance costs. They may also take into account the car’s safety rating, the year it was made, and its likelihood of theft.

Pro tip: There are many factors that affect car insurance rates, so if you’re considering a new car, check on the finer details pertaining to the vehicle’s specifics before committing.

Where you live could cost you

phantom1311/Adobe cars stopped at a red traffic light signal

The cost of insurance could differ, whether you live in the country or a city. High-density areas have an increased chance of accident, so the rate reflects that risk. Another factor that could raise fees is if your hometown has higher car theft incidents. In addition, in states like Michigan — where instances of insurance fraud and uninsured drivers are greater — insurance costs are higher than the national average.

Teen drivers may raise your rate

AntonioDiaz/Adobe Caucasian teen girl ready to start her driving test

Teenage drivers have the highest crash rate of any age group, which is why adding the new driver in the family to your policy could impact your wallet. Do some additional shopping to check if the cost of having a policy with a teen may be lower with a different provider or ask your current provider if they offer a discounted rate for multiple drivers. Some insurers reward teens with good grades in school with a discount.

Loans are a factor

Freedomz/Adobe handshake of cooperation customer and salesman after agreement on car loan

Insurance costs factor in whether you are buying a car outright or getting a bank loan for it. A bank may require you to carry extra collision coverage or additional premiums to make sure their loan is protected in the event of an accident or any other damage to your car. Check with your bank before you sign a loan for your car to see what kind of insurance coverage they may require you to carry.

Accidents could follow you

Monkey Business/Adobe young male motorist involved in car accident calling insurance company

Insurance companies have access to two different databases: LexisNexis Comprehensive Loss Underwriting Exchange (CLUE) and Verisk Automated-Property Loss Underwriting System (A-PLUS). Both databases let them see if you’ve filed a claim or been in an accident, which they could factor into your insurance costs. These reports can show companies up to seven years of claims, so switching providers may not help you dodge a previous issue.

Pro tip: You can request a free copy of your Consumer Disclosure Report from LexisNexis and Verisk A-PLUS loss history report to see what information insurance providers have access to and if any corrections need to be made.

Loyalty doesn’t always equal savings

Freedomz/Adobe insurance and care protection of car concept

You could think you’re getting a “loyal driver” discount by staying with the same insurance provider for several years, but you may want to do some comparison shopping. While loyalty is important, it also demonstrates to providers that you’re comfortable where you are, which is something they may use to increase your rate.

Try renegotiating if you notice an increase or seek quotes from other providers to see if moving on could save you money.

Monitoring may not save you money

AntonioDiaz/Adobe attractive male driver using the GPS navigation map on the car

Some insurance companies allow you to add monitoring devices in order to provide safe driver discounts. These devices, or apps, may track how many miles you drive, if you brake hard, or when you’re on the road. Details like these are translated to data points for the insurance company to evaluate. But in some states, insurance providers may also be able to use this information to increase your rates depending on any negative driving habits they may discover.

Pro tip: Know the specific details pertaining to the state where you reside before choosing to go the monitoring device route.

They don’t advertise discounts

88studio/Adobe mortgage loan auto insurance contract agreement

If you want to cut your insurance costs, it may be helpful to be proactive about any potential discounts you can receive. Call your insurance company to find out if they have unadvertised offers that you may not be taking advantage of, such as good student or loyal customer discounts. Also ask about any rate cuts for a home and car insurance bundle.

Insurers know your credit score

Freedomz/Adobe insurance agent working on report form

Insurance companies may contend that a driver’s credit score could reflect their ability to pay premiums or even how risky they are to insure. Someone with a poor credit score may be deemed by an insurance provider as a greater risk, and that could factor into rate calculations.

Pro tip: Learn about what constitutes a good credit score, and how you might potentially improve it if you’re worried about how it could affect your insurance rates.

Lower premiums could cost you

georgerudy/Adobe woman paying for car insurance

Lower car insurance premiums may sound great if it means you’re paying less than your current plan, but make sure you compare more than just your monthly costs. Lower premiums could mean you have a plan with a high deductible, and you may have to pay more out of pocket for any repairs or damage before your insurance will kick in.

Bottom line

crizzystudio/Adobe insurance officers hand over the car keys after the tenant

Knowing how car insurance works and what factors a provider takes into account can be a good way for you to reduce your costs. Look over your profile as a car owner and think about details that may have a positive or negative effect on your rates. And compare rates to see if making a switch to a different provider or adjusting your current policy could help you put money back in your wallet.

  • You could save up to $600 with some companies
  • Compare dozens of providers in under 5 minutes
  • Fast, free and easy way to shop for insurance
  • Quickly find the perfect rate for you

Author Details

Jenny Cohen

Jenny Cohen is a freelance writer who has covered a bit of everything, from finance to sports to her favorite TV shows. Her work has been featured in The Wall Street Journal, USA Today, and FoxSports.com.